“Key Socio-Economic Issues Impacting National Economic Resilience & Competitiveness”

1. ASLI - SEDAR Roundtable Discussion “Key Socio-Economic IssuesImpacting National Economic Resilience & Competitiveness” by Datuk Nicholas S. Zefferys P.J.N. Governor & Past President American Malaysian Chamber of Commerce President & CEO Applied Consulting & Engineering Sdn. Bhd. Director – Southern Bank Berhad 14 January 2006

2. Requires 7% Avg. Annual Growth (some years higher-others lower) 2020 The march towards Comparative Advantage And Jobs 9th Malaysia Plan (pending) 2006 Anticipate steady but unspectacular growth (as reflected in Budget 2006)

3. 3rd Qtr 2005 Economic Results • GDP growth @ 5.3% (v. 4.4% 2nd Qtr); led by Svcs. & Mining • Exports up 7.5% (v.28% in ‘04) led by E&E (6.8% growth; 84% of all exports) • Deficit=0.6% of GDP (est. 3.8% for year) • Inflation tending higher: price increases in chicken, petrol, other • Monetary policy tracking with expansion); lending rate increased to curb inflation • Ringgit appreciating slightly; curbs imported inflation Building a solid economic foundation

4. The Malaysian Model Socio-Economic Dualities 55% Muslim 45% Non- Muslim State-owned Enterprises/Jobs/ Education Private Enterprises/Jobs/ Education Separate yet integrated economies complimenting each other Two interactive societies living/working side-by-side

5. The Dual Tracks of Malaysia Syriah Law Priority School seats 30% Entitlements Bumi Track Social Civil Law Vernacular Schools Global Mobility Non-bumi track NEP/NDP/Affirm. Actn. Party Dominance Gov’t/Bus Alliance Bumi Track Economic Social-contractEconomic survival Niche strategies Non-bumi Track

6. Where the tracks lead? This? or . . . This? Bumi Malaysians Non-Bumi Joint but balanced, and stronger development Separate, protected -- but lesser development.

7. SOCIO-ECO SPHERE - To Be Regionally Competitive - Drive Mission Critical Development - Grow the Economy - Meet Regulatory & Social Obligations Above Surface Goals Driving Forces Below The Water Line Leadership & Collaboration CEO: PM MOF II Khazanah Nasional PNB EPF LTAT LUTH NEP KHAZANAH Both address structural reforms

8. Enhance Board Effectiveness Strengthen Directors Capabilities Enhance GLIC Monitoring & Management Improve Regulatory Environment Clarify Social Obligations Review & Revamp Procurement Optimise Capital Management Practices Manage & Develop Leaders & Other Human Capital Intensify Management Practices Enhance Operational Improvement GLC Transformation Manual

9. Khazanah Transformation Plan • Phase 1: Launched 29 July 2005 by PM Develop Goals & Initiatives • Phase 2 (Aug. ‘05 - Dec. ‘06): Execution of initiatives • Phase 3 (2-5 years from now): Materialisation of sustained benefits • Phase 4 (5-10 years onwards): GLCs transform into regional champions

10. Moving from . . . Jaguh Kampung To . . . Jaguh Dunia . . . not just in trade, but also investment

11. NEP/NDP AFFIRMATIVE ACTION POLICIES Borne of poverty reduction & wealth redistribution goals As well as preparation for Globalism. Perceptions? Realities? British Legacy: - Downgraded Malays - Intellectual caldron of “isms”): Malaysian Legacy: Strong Government Central Control Government decides market winners & losers?

12. PM Abdullah’s Presidential Speech On The Malay Struggle WE want to become an advanced nation. (The rest of the world) will not formulate policies to help Bumiputras. The global economy does not recognise quotas; it will not allocate special projects for Bumiputras. The global economic lexicon only acknowledges terms such as competition, competitiveness, productivity, innovation, creativity, originality, excellence and efficiency.

13. Paradigm Pliancy (A Model for Change) The ability to stretch the mind and break out of the box! Existing Paradigm (A) Breaking out of the Box (B) Stepping into a New Domain (C) Entitlements & Affirmative Action A + B = C Equal Opportunity & Meritocracy

14. New Course Old Course Changing course or “tacking” yields a short period of turbulence as the sail is reset to a new course and the wind fills the sail propelling it on its new direction.

15. 2006 A turning point? Malaysia has a demonstrated pragmatism for doing the right things.

16. Keadilan Supreme Council The Edge: Nurihsan Majid • Unanimously approved an economic motion to “replace race based NEP” with a New Economic Agenda • Seeking an ideal of universality • A racial approach is inadequate to deal with complex socio-economic inequality in Malaysia

17. Keadilan’s New Economic Agenda The Edge: Nurihsan Majid • Emphasis on justice for all Malaysians; eradicating poverty regardless of race; • Narrowing the gap in rural & urban development; • Provide training & education to all Malaysians to face a K-based economy; • Promote entrepreneurship for a stronger small & medium sized enterprise backbone of the economy;

18. Keadilan’s New Economic Agenda The Edge: Nurihsan Majid • Promote a delivery system which is worker & business friendly, that inculcates accountability & openness for more sustainable development; • Ensure government intervention is limited & strategic by forging positive partnership with the private sector that empowers economic actors for a growth-based economy; and • Forge a positive economic strategy to compete in a globalised economy.

19. A Paradigm Forward? ECONOMIC SOCIAL Moving From Entitlements To Equal Opportunity Moving From Gov’t. Run Business To Private Enterprise

20. Xie Xie Terima Kasih Thank You Nandree Shukriya